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Europe: Stocks surge on Greek relief; FTSE hits historic high

Sat, Mar 21, 2015 - 7:37 AM

PHOTO: REUTERS

[LONDON] European stocks ended the week on a high on Friday with London's FTSE surging past the 7,000 mark for the first time in history, after Greece pledged new reform plans and the EU offered two billion euros in emergency aid.

London's benchmark FTSE 100 index closed 0.86 per cent higher at 7,022.51 points, boosted by the British government's upbeat budget this week as well as an outlook for stronger growth.

Elsewhere in Europe, the CAC 40 in Paris also gained 1.0 per cent to 5,087.49 points and Frankfurt's DAX 30 added 1.18 per cent to 12,039.37 points.

"Risk appetite increased after a fairly volatile week in the markets," said Myrto Sokou, senior research analyst at Sucden Financial.

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For Forex.com analyst Fawad Razagzada, this is only the beginning of the FTSE's winning streak.

"I think that the ECB's QE programme and the record low interest rates across many developed economies, including the UK, combined with a much weaker oil price will spur economic growth in the eurozone - the UK's largest trading partner - and help push the FTSE to much higher levels in the coming months," he said.

British finance minister George Osborne on Wednesday raised the country's growth estimate to 2.5 per cent while slashing its deficit forecasts.

EU OFFER TO GREECE

In foreign exchange activity, the European single currency climbed to US$1.0845 from US$1.0660 late on Thursday in New York, pushing higher on the Greek news.

Traders moved into the single currency after Greece's deal with its key European partners, who agreed to finish work "as fast as possible" on completing its EU-IMF rescue programme.

And European Commission chief Jean-Claude Juncker said Friday he was making 2.0 billion euros of unused EU development funds available to Greece as it battles a cash crunch.

"Greek Prime Minister Alexis Tsipras promised EU creditors that Greece is soon to present a detailed list of economic reforms to enable loans to continue and prevent the country running out of cash," said CMC Markets analyst Jasper Lawler.

"Exactly a month ago on February 20, a provisional list of reforms was offered by Greece to allow a four-month extension of its bailout." But the recovery of the euro may only be temporary as analysts expect the dollar to resume its advance as the US Federal Reserve prepares for a rate hike at some stage.

NIKE DOES IT

The Federal Reserve's statement on Wednesday that cooled expectations of an early rate hike had sent equity markets soaring.

While the US central bank opened the door for a rise after six years of zero percent rates, it lowered its forecasts for economic growth and inflation and stressed it would remain cautious before making any move.

Wall Street was full of optimism on Friday, as a strong Nike earnings report further boosted sentiment.

At mid-day trade, the Dow Jones Industrial Average was up 1.20 per cent to 18,173.83 points.

The broad-based S&P 500 gained 0.98 per cent to 2,109.77, while the tech-rich Nasdaq Composite Index surged 0.85 per cent to 5,034.72.

Dow member Nike jumped 3.4 per cent as earnings for the quarter ending Feb 28 gained 16 per cent to US$791 million.